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Morning Report: The Legal Weed Market Needs the Black Market — For Now

Despite marijuana legalization, the black market for weed is still needed to meet demand, San Diego City Council candidate Bryan Pease talks rent control, a DACA recipient is released from custody and more.

Urbn Leaf has hired a company to pick up tourists in Pacific Beach and other areas. / Photo by Vito Di Stefano

San Diego’s marijuana industry is not exactly a unified force. It’s made up of disparate, and occasionally rival, interests who aren’t afraid to throw elbows.

But they all agree that at the moment, the black market is serving a crucial role for the city’s legal marijuana industry.

As I wrote Friday, San Diego is home to 17 medical dispensaries — 13 of which have gotten approval from the state to sell recreationally — and about 1.4 million people. The legal supply chain isn’t functioning yet, and it’s unlikely to be able to handle the region’s full demand any time soon.

That means lots of people are still going to turn to the black market for the foreseeable future.

Other forces conspire to push people underground. One study out of San Francisco estimates that the effective tax rate across the state could be as high as 45 percent.

At the same time, police departments throughout the county have been stepping up enforcement efforts against illegal operators — a move that strikes some industry professionals as wasteful and self-defeating.

Weedmaps, an online marketplace based in Irvine, estimates that the cost of shutting down a single dispensary in Southern California can exceed $50,000. Once shut down, many of those underground operators simply reopen a short time later.

• In a new op-ed, Dustin McDonald, the company’s vice president for government relations, predicts that efforts to stomp out the illicit market will create a bigger one. He provides a few startling figures: in San Diego, there is is one legal pot shop or delivery service for every 82,000 residents; Los Angeles, by comparison, is projected to be one per 4,000 residents, while Denver is one per 2,125 residents.

At a San Diego Cannabis Delivery Alliance meeting this week, members discussed the need to raise money and hire a lobbyist who’d try to broaden the marketplace to their advantage.

Monica Dean of NBC 7 and I talked more about delivery services on this week’s episode of San Diego Explained. We met outside the Urbn Leaf in Bay Park and found a “CannaBus” that picks up tourists in Pacific Beach and other tourist areas and brings them to the dispensary.

This Week on the Podcast

Environmental attorney and animal rights activist Bryan Pease has received national attention for his work to protect seals at the La Jolla Children’s Pool. He is also running for San Diego City Council and came into the studio this week to talk about his campaign.

Pease talked rent control, his plan to revamp a voucher program for low-income housing and his belief that the city needs to ban whole-home vacation rentals. He said the City Council is “dragging its heels on implementing some very basic tenant protections and policies that other, similarly situated cities have.”

Also on the podcast, Scott Lewis and Andrew Keatts consider Mayor Kevin Faulconer’s recent state of the city speech and some of the things he left out.

Sacramento Report: A Dreamer Is Released

Lobbying efforts by California’s Latino Legislative Caucus, which includes our Democratic state delegation, on behalf of a 22-year-old UC San Diego student detained by immigration officials appear to have made an impact.

State Sen. Ben Hueso and Assembly members Lorena Gonzalez Fletcher and Todd Gloria wrote letters in support of releasing Orr Yakobi, a DACA recipient who was detained after he was a passenger in a vehicle that made an unintentional turn into Mexico. He was released late last week.

The caucus also wrote in support of 20-year-old Luis Mora Villota, a UC Berkeley student, but his case is more complicated because he overstayed his visa, according to ICE. As Marisa Agha writes in this week’s Sacrameto Report, Gonzalez Fletcher said Villota “fits into the spirit of the law, not the letter of the law. He should continue his studies.”

Meanwhile, Republican Assemblywoman Marie Waldron is part of an effort to grant victims of sexual harassment three years to report their complaints to the state Department of Fair Employment and Housing rather than the current one year.

Officials at San Diego Unified School District are once again facing a budget shortfall. They’ve asked parents to identify which potential cuts they can live with as part of this year’s attempt to balance the budget. (Ashly McGlone)

We’ve reproduced Mayor Kevin Faulconer’s State of the City speech and annotated his comments with context and links to help you better understand what the mayor said — and what he left out. (Lisa Halverstadt)